SHAKIB BIN ABU BAKAR BANAFEE v 1. ) AWH INTERNATIONAL LOGISTICS SDN. BHD. 2. ) MOHD AZIZUL BIN MOHD NASIR 3. ) AHMAD AKID BIN NOOR AZLEE

Case Significance

Addresses an application to strike out or stay a statutory derivative-action leave summons under the Companies Act 2016 on grounds of multiplicity of proceedings and abuse of process, engaging the wide doctrine of res judicata and section 25(2) of the Courts of Judicature Act 1964.

This High Court (Johor Bahru, Commercial Division) decision concerns an application to strike out an originating summons on the ground that it was scandalous, frivolous or vexatious, or otherwise an abuse of the process of the court, brought under Order 18 rule 19(1)(b) and (d) of the Rules of Court 2012. There was also an alternative prayer for the originating summons to be stayed pending the disposal of another writ action pending between the parties. The originating summons itself sought leave to bring a derivative action under sections 345, 347, 348, 349 and 350 of the Companies Act 2016 in respect of a logistics company, the plaintiff suing as a minority shareholder for the benefit of that company.

After hearing full arguments from counsel for both parties, the court dismissed the striking-out application with costs. In its reasons the court examined whether the multiplicity of proceedings between the parties, including two other suits, told against allowing the derivative-action application to proceed. It considered the doctrine of res judicata and its wider reach, which extends not only to points on which the court was actually required to adjudicate but to every point which properly belonged to the subject of the litigation and which the parties, exercising reasonable diligence, might have brought forward at the time.

The court also had regard to section 25(2) of the Courts of Judicature Act 1964, which addresses the power to dismiss or stay proceedings where the matter is res judicata or where, by reason of multiplicity of proceedings, the proceedings ought not to be continued. Weighing the combined grounds, the court found a strong basis to conclude that the originating summons was said by the applicant to be unnecessary and an attempt to embarrass or annoy the other party. The judgment illustrates how a court balances the statutory leave requirement for a derivative action against objections of multiplicity of proceedings and abuse of process.